Musharraf appeals against Islamic banking

  • From: "Muslim News" <editor_@xxxxxxxxxxxxxxx>
  • To: <submit@xxxxxxxxxxxxxxx>
  • Date: Tue, 18 Jun 2002 18:56:11 +0100

Pakistan's military government is desperately trying to stall attempts
by the religious right wing to Islamise the country's economy by banning
all interest payments, writes Rory McCarthy 

After years of legal wrangles, Pakistan's supreme court last year
ordered the government to switch to an Islamic banking system. At the
last minute Islamabad convinced the court to delay the decision for
another year. Now again a rushed appeal has begun to halt the switch to
an interest-free economy due at the start of next month. 

Hardline clerics, angered by General Pervez Musharraf's alliance with
America and his recent concessions over Kashmir, are trying to use the
case to drum up opposition to the regime. 

In appeal hearings before the sharia court, which governs Islamic laws
in Pakistan, government lawyers argued yesterday the new law would
severely harm the country's already weak and debt-ridden economy. 

"The transformation of the entire financial system is not practicable,"
government advocate Raza Kazim told the court. "If attempted there is a
high degree of risk and likelihood of permanent damage to the already
fragile economy of the country." 

As a compromise it appears the state will offer to set up a parallel
Islamic banking system for religious-minded customers. The idea of
mandatory interest-free banking was first introduced more than a decade
ago by rightwing ideologues under the rule of Nawaz Sharif, the then
prime minister. They wanted to stop banks charging interest from
borrowers and paying interest to depositors. 

Western governments, which have lent billions of dollars in aid to
Pakistan over the 1990s, convinced Mr Sharif to drop the idea. But when
he returned to power in 1997 he again began legal proceedings to reform
the economy, hoping a ban on interest would mean he too could avoid
paying interest on millions of dollars in international business loans. 

Most other Muslim countries which have introduced Islamic banking
systems have found other ways to offer interest payments. Economic
analysts in Pakistan fear an interest-free economy would make it hard
for the country to attract much-needed foreign investment or to secure
further loans from international lenders. 

In Pakistan the case has become a key element in a new campaign of
opposition against Gen Musharraf, led by a growing body of rightwing
clerics, frustrated militant fighters and even Islamist retired army
officers. For the past 20 years Pakistan has encouraged these militants
and co-opted Islamist elements into its political system. Now they are
beginning to turn against the state that supported them. 

Since September 11 Gen Musharraf has allied himself clearly with America
in the war against his former allies, the Taliban. In the last month he
has promised to halt militant infiltration into Kashmir, angering a
powerful force in society which believes the decade-long guerrilla war
against the Indian army is a legitimate "freedom struggle". 

This opposition movement appears to be encouraging other rightwing
elements in the country. Earlier this month there were brawls at the
supreme court after religious hardliners who support the interest-free
economy law complained about the judges and lawyers hearing the case.
There have been dozens of rallies to show support for the Kashmir cause
and several militant leaders have defied government bans to appear in
public. 

This week a prisoner convicted of blasphemy was gunned down in prison in
Lahore by a sectarian extremist while he waited for an appeal hearing to
begin. 

The religious right wing, so long courted by the Pakistani state, is
fast becoming its greatest threat. 

Source:  Guardian

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